YieldBoost NorthWestern Energy Group To 55.4% Using Options
May 23, 2024 at 13:06 PM EDT
Shareholders of NorthWestern Energy Group Inc (NWE) looking to boost their income beyond the stock's 5% annualized dividend yield can sell the July covered call at the $55 strike and collect the premium based on the $4.05 bid, which annualizes to an additional 50.4% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 55.4% annualized rate in the scenario where the stock is not called away. Any upside above $55 would be lost if the stock rises there and is called away, but NWE shares would have to climb 6.8% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 14.7% return from this trading level, in addition to any dividends collected before the stock was called.